The New Deal

A contract formally announced this month between the Energy Department and Oracle Corp. to provide software licenses for the agency has attracted a lot of attention in federal circles. The deal requires Oracle to build more than 250 security enhancements into the latest version of its database software, and to centrally distribute and manage licenses on behalf of Energy.

Computer security experts have been heralding the deal-a first of its kind, by all accounts-as a major step forward in better securing federal cyberspace. But the deal is also remarkable for what it says about the way deals are done in today's federal technology market.

First, the deal is big. Not in terms of its price tag-the software license is worth only $5 million-but in terms of what it covers-namely, the entire Energy headquarters facility in Washington and a far-flung national array of laboratories, federal facilities and contractor workplaces. Managing which offices get software, and when, and tracking how it is being maintained might seem like a Herculean task. But Oracle does it every day for its own offices.

Karen Evans knew that. Energy's chief information officer, who will soon take over as the federal e-government czar at the Office of Management and Budget, told Oracle executives that if they wanted Energy's business, they'd have to throw in their management services to sweeten the deal. And that deal pays dividends to both sides. Evans scored a victory for secure computing by getting the contractor to keep an eye on who's using its software, and how. And Oracle gets to spot any security vulnerabilities before they become full-fledged problems, thereby reducing the amount of time it has to spend cleaning up messes. It's a vast, all-encompassing agreement, and according to the Bush administration's mandates, it's the direction in which all technology-buying agencies should be moving.

Another reason this deal could make procurement waves is that it has vested so much purchasing power in the hands of the CIO, rather than in those of the procurement director. Ever since passage of the Clinger-Cohen Act in 1996, which required agencies to install technology chiefs, CIOs have debated whether they really have a seat at the management table. There can be no doubt that, at least at Energy, Evans does command such a seat, and that she is directly responsible for decisions on how to spend millions of dollars.

Evans' reputation as a technology maven precedes her service at Energy. In the late 1990s, following the first cyberattack on a Justice Department Web site, Evans was among the first people to get a call from FBI investigators, says Alan Paller, the research director of the SANS Institute, a security research organization that has participated in a number of cyber investigations.

At the time, Evans was the director of a division that oversaw Justice networks. Paller says she "spent months reengineering the networks to inoculate them against further attacks." He called Evans "the most security-savvy (and effective) CIO."

In her new role at OMB as the government's top CIO, Evans will combine that technical expertise with deal-making savvy. She will oversee tens of billions of dollars worth of annual technology expenditures. And with OMB's new SmartBuy initiative, which requires agencies to clear their software license purchases through the General Services Administration, to avoid buying licenses they don't need, Evans will play a role in crafting more deals like the one she struck with Energy. She will take office at OMB in October.

But perhaps the most significant message about the Oracle-Energy deal is the one it delivers to vendors: This is how the government wants to make deals from now on. The weight of OMB is, at least, behind that. The man Evans is replacing, Mark Forman, harped on agencies to pool their buying power and use that power to squeeze better deals from contractors. Across government, massive deals are being inked with single vendors, who are responsible for providing a variety of services for their agency customer. Energy's deal is yet another example of how the government is depending more and more on industry to carry out its day-to-day operations. And if Evans' promotion to OMB is any indication of how the administration values those kinds of arrangements, expect to see many more deals carrying the mark of Evans in the months to come.

On Hold

Anticipation is mounting over the award of three potentially lucrative licenses to sell mobile telephone service in Iraq. A number of Western firms and Iraqi conglomerates have vied for the licenses, which were expected to be issued days ago by the U.S. occupation authority in Baghdad.

Now comes word that the government has narrowed the field of bidders to only three companies. Firms were allowed to bid on more than one license, which are divided geographically, so it's conceivable one company could win business rights to more than one region of the country.

News organization Iraq Today reported last Monday that the award has been delayed because Iraq's new communications minister, Hayder A'abadi, wants more time to review the procurement process. A'abadi reportedly believes the $5 million annual license fee the Iraqi treasury would collect is too small.

However, a source close to the telecom license bidding, who asked to remain anonymous, said A'abadi is concerned that some of the companies making offers had long-standing financial ties to the government of Saddam Hussein. The source said the new Iraqi Governing Council is worried about handing business to any companies that profited from sweetheart deals with Hussein's regime.

The source added that an award is now rumored to be in the offing for Wednesday. The U.S.-led Coalition Provisional Authority, led by Ambassador Paul Bremer, hasn't issued a statement about the award.